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Title 45- PUBLIC WELFARE

Chapter IV-Social and Rehabilita

tion Service (Rehabilitation Programs), Department of Health, Education, and Welfare VOCATIONAL REHABILITATION PROGRAMS AND ACTIVITIES Revision of Parts 401, 402, 403, 404, 405, and 406, and Addition of Parts 408, and 409 of Chapter IV

Notice of proposed rule-making for Vocational rehabilitation programs and activities was published in the FEDERAL REGISTER of January 30, 1969 (34 F.R. 1474). The views of interested persons were requested, received, and considered, and, in the light thereof, certain changes in the proposed regulations were made.

Accordingly, Chapter IV of Title 45 of the Code of Federal Regulations is amended to include new regulations to implement the Vocational Rehabilitation Amendments of 1967 (Public Law 90-99) and the Vocational Rehabilitation Amendments of 1968 (Public Law 90-391). Some changes are also made in existing regulations to reflect the current organization of the Social and Rehabilitation Service as well as its program activities and emphases.

Part 401, as revised, covers only grants made to State vocational rehabilitation agencies under the State plans for vocational rehabilitation services. Included is the program authorized by section 222(d) of the Social Security Act, as added by section 336 of Public Law 8997, which provides for payment from the social security trust funds for vocational rehabilitation services furnished to social security disability beneficiaries. Part 402 covers the newly-authorized Vocational Evaluation and Work Adjustment programs for the disadvantaged under State evaluation and work adjustment plans.

401.21

401.22

Part 403 covers special projects grants in vocational rehabilitation designed to serve handicapped individuals. (Subpart 401.23 A of Part 403 had formerly been included in Part 401.)

Part 404 covers project grants and other assistance for rehabilitation facilitles (Subpart I of Part 404 had formerly appeared in Part 401 and the remaining material had previously constituted Part 402).

Part 405 covers research and demonstration activities and Part 406 covers training grant programs. (Except for Subpart D of Part 406, this material had previously appeared in Part 403).

STATE PLAN CONTENT: CASEWORK PRACTICE

handicapped individuals.

Administration.

Purchase of goods, facilities, or services from other agencies of the State.

Insurance and taxes.

State and local funds.

Shared funding and administration

of joint projects.

ALLOTMENT AND PAYMENT

Payments from allotments.

Refunds.

Determining to which fiscal year an expenditure is chargeable.

Subpart D-Payment of Costs of Vocational Rehabilitation Services to Disability Beneficiaries from the Social Security Trust Funds

401.30

401.31

401.32

401.33

Case study and diagnosis. Extended evaluation plan.

401.34

401.35

Processing referrals and applica

tions.

401.113

401.114

401.37

401.115

401.38

review of agency action, and fair hearings.

401.116

401.117 Budgets.

Payments of trust funds.

401.118 Reports.

and

Subpart E-Grants to States for Innovation of

Part 409, dealing with the vending stand program for the blind, sets forth the material formerly contained in Part 404.

Federal financial assistance extended under this chapter is subject to the regulations in 45 CFR Part 80, issued by the Secretary of Health, Education, and Welfare, and approved by the President, to 401.43

Vocational Rehabilitation Services

Purpose.

Application procedure.

Sec.

401.134 Allotment of Federal funds for in

401.135 401.136

novation projects. Payments from allotments.

Continuation grants for innovation projects; reports. 401.137 Project amendments. 401 138 Methods of computing and making payments.

AUTHORITY: The provisions of this Part 401 issued under sec. 7(b), 68 Stat. 658, 29 U.S.C. 37(b) and sec. 205, 49 Stat. 624, sec. 1102, 49 Stat. 647, sec. 222(d), 79 Stat. 408, as amended. 42 US.C. 405, 1302, 422(d). Interpret and apply the Vocational Rehabilitation Act, as amended, 29 USC. ch 4. and sec. 222(d), Social Security Act, 42 US.C. 422 (d).

Unless otherwise indicated in the regulation in this part, the terms below are defined as follows:

(a) "Act" means the Vocational Rehabilitation Act, as amended (29 US.C. ch. 4).

(b) "Administrator" means the Administrator of the Social and Rehabilltation Service in the Department of Health, Education, and Welfare.

(c) "Blind" means persons who are blind within the meaning of the law relating to vocational rehabilitation in each State.

(d) "Construction of a rehabilitation facility" means (1) the construction of new buildings, the acquisition of existing buildings, or the expansion of existing buildings, which are to be utilized for rehabilitation facility purposes; (2) the acquisition of initial equipment of such new, newly acquired, or newly expanded buildings; or (3) the initial staffing of such a rehabilitation facility for a period not to exceed 4 years and 3 months.

(e) "Eligible" or "eligibility," when used in relation to an individual's qualification for vocational rehabilitation services, refers to a certification that (1) a physical or mental disability is present; (2) a substantial handicap to employment exists; and (3) vocational rehabilitation services may reasonably be expected to render the individual fit to engage in a gainful occupation.

(1) "Establishment of a rehabilitation facility" means (1) the expansion, remodeling, or alteration of existing buildings, necessary to adapt or to increase the effectiveness of such buildings for rehabilitation facility purposes; (2) the acquisition of initial equipment for such purposes; or (3) the initial staffing of a rehabilitation facility, for a period not to exceed 4 years and 3 months.

(g) "Family members" or "members of the family" means any relative by blood or marriage of a handicapped individual and other individuals living in the same household with whom the handicapped individual has a close interpersonal relationship.

(h) "Gainful occupation" includes employment in the competitive labor market; practice of a profession; selfemployment; homemaking: farm or family work (including work for which payment is in kind rather than in cash);

RULES AND REGULATIONS

sheltered employment; and home industries or other gainful homebound work.

(1) (1) "Handicapped individual" means any individual who has a physical or mental disability and a substantial handicap to employment, which is of such a nature that vocational rehabilitation services (paragraph (z) (1) of this section) may reasonably be expected to render him fit to engage in a gainful occupation, including a gainful occupation which is more consistent with his capacities and abilities.

(2) "Handicapped individual" also means any individual who has a physical or mental disability and a substantial handicap to employment for whom vocational rehabilitation services (paragraph (z) (2) of this section) are necessary for the purpose of extended evaluation to determine rehabilitation potential.

(1) "Local rehabilitation agency" means the public agency of a political subdivision of a State which has sole responsibility for administering the vocational rehabilitation program in the locality, under the supervision of the State agency.

(k) "Maintenance" means payments to cover the handicapped individual's basic living expenses, such as food. shelter, clothing, health maintenance, and other subsistence expenses essential to determination of the individual's rehabilitation potential or to achievement of his vocational rehabilitation objective.

(1) "Management services and supervision" for small business enterprises includes inspection, quality control, consultation, accounting. regulating, inservice training. and other related services provided on a systematic basis to support and improve small business enterprises operated by blind or other severely handicapped persons under a State agency's small business enterprise program. "Management services and supervision" does not include those services or costs which pertain to the operation of the individual business enterprise, such as employment of substitute workers, rent, advertising and other operating costs.

(m) "Nonprofit," when used with respect to a rehabilitation facility means a rehabilitation facility which is owned and operated by a corporation or association, no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual, and the income of which is exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1954.

(n) "Occupational license" means any license, permit, or other written authority required by a State, city, or other governmental unit to be obtained in order to enter an occupation.

(o) "Physical or mental disability" means a physical or mental condition which materially limits, contributes to limiting or, if not corrected, will probably result in limiting an individual's activities or functioning. It includes behavioral disorders characterized by a pattern of deviant social behavior or impaired ability to carry out normal re

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lationships with family and community which may result from vocational, educational, cultural, social, environmental, or other factors.

(p) "Physical restoration services" means those services which are necessary to correct or substantially modify within a reasonable period of time a physical or mental condition which is stable or slowly progressive, and includes: (1) Medical or surgical treatment by general practitioners or medical specialists; (2) psychiatric treatment; (3) dentistry; (4) nursing sevices; (5) hospitalization (either Lapatient or outpatient care) and clinic services; (6) convalescent, nursing or rest home care; (7) drugs and supplies; (8) prosthetic devices and orthotic devices essential to obtaining or retaining employment; (9) eye glasses and visual services, as prescribed by a physician skilled in the diseases of the eye or by an optometrist; (10) physical therapy; (11) occupational therapy; (12) speech or hearing therapy; (13) psychological services; (14) treatment of medical complications and emergencies, either acute or chronic, which are associated with or arise out of the provision of physical restoration services, or are inherent in the condition under treatment; and (15) other medical or medically related rehabilitation services. The provision that the condition is stable or slowly progressive does not apply when physical restoration services are provided under extended evaluation in order to determine the rehabilitation potential.

(q) "Regional Commissioner" means the Regional Commissioner of the Social and Rehabilitation Service.

(r) "Rehabilitation facility" means a facility which is operated for the primary purpose of providing vocational rehabilitation services to or gainful employment for handicapped individuals, or for providing evaluation and work adjustment services for disadvantaged individuals under Part 402 of this chapter, and which provides singly or in combination one or more of the following services for handicapped individuals: (1) Comprehensive rehabilitation services which include, under one management, medical, psychological, social, and vocational services: (2) testing, fitting, or training in the use of prosthetic and orthotic devices; (3) prevocational conditioning or recreational therapy; (4) physical and occupational therapy; (5) speech and hearing therapy; (6) psychological and social services; (7) evaluation; (8) personal and work adjustment; (9) vocational training (in combination with other rehabilitation services); (10) evaluation or control of special disabilities; and (11) transitional or long-term employment for the severely handicapped who cannot be readily absorbed in the competitive labor market: Provided, That all medical and related health services must be prescribed by, or under the formal supervision of, persons licensed to practice medicine or surgery in the State.

(s) "Secretary" means the Secretary of Health, Education, and Welfare.

(t) "Small business enterprise" means a small business operated by blind or

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other severely handicapped persons under the management and supervision of the State agency or its nominee. Such businesses include only those selling, manufacturing, processing, servicing, agricultural, and other activities which are suitable and practical for the most effective utilization of the skills and aptitutes of blind or other severely handicapped persons and provide substantial gainful employment or self-employment commensurate with the time devoted by the operator or operators to the business, the cost of establishing the business and other factors of an economic nature.

(u) "State" means the several States, the District of Columbia, the Virgin Islands, Puerto Rico, and Guam.

(v) "State agency" or "State vocational rehabilitation agency" means the sole State agency designated to administer (or supervise local administration of the State plan for vocational rehabilitation services. The term includes the State agency for the blind, if designated as the sole State agency with respect to that part of the plan relating to the vocational rehabilitation of the blind.

(w) "State plan" means the State plan for Vocational rehabilitation services.

(x) "Substantial handicap to employment" means that a physical or mental disability (in the light of attendant medical, psychological, vocational, educational, cultural, social, or environmental factors) impedes an individual's occupation performance, by preventing his obtaining, retaining, or preparing for a gainful occupation consistent with his capacities and abilities.

(y) "Visual services" means visual training, and the examination and services necessary for the prescription and provision of eyeglasses, contact lenses, microscopic lenses,

telescopic lenses,

and other special visual aids, as prescribed by a physician skilled in diseases of the eye or by an optometrist.

(z) (1) "Vocational rehabilitation services" means any goods and services necessary to render a handicapped individual fit to engage in a gainful occupation, including (1) evaluation, including diagnostic and related services; (11) counseling and guidance; (ii) physical restoration services; (iv) training, including personal and vocational adjustment; (v) books and training materials (including tools); (v1) maintenance; (vi) placement; (viii) followup services; (x) tools, equipment, initial stocks and supplies, including equipment and initial stocks and supplies for vending stands; (x) management services and supervision provided by the State agency and acquisition of vending stands or other equipment and initial stocks and supplies, for small businesses enterprises, operated under the supervision of the State agency by the severely handicapped; (x1) transportation; (xi) occupational licenses; (xii) reader services for the blind; (xiv) interpreter services for the deaf; (xv) services to members of a handicapped individual's family when such services will contribute substantially to the rehabilitation of the

(2) "Vocational rehabilitation services" (for the purpose of extended evaluation for the determination of rehabilitation potential) also means any goods or services, including the items specified in subparagraph (1) (1) through (vi), (x1), (xii)-(xv), and (xvii) of this paragraph, which are provided to an individual who has a physical or mental disability and a substantial handicap to employment, during the period specified by the Administrator ( 401.31) to be necessary for, and which are provided for the purpose of ascertaining whether it may reasonably be expected that such individual will be rendered fit to engage in a gainful occupation through the provision of goods and services described in subparagraph (1) of this paragraph;

(3) "Vocational rehabilitation services" also covers the establishment of a rehabilitation facility and the construction of a rehabilitation facility;

(4) The term also covers the provision of other facilities and services which promise to contribute substantially to the rehabilitation of a group of individuals but which are not related directly to the rehabilitation plan of any one handicapped individual.

(aa) "Workshop" means a rehabilitation facility, or that part of a rehabilitation facility, where any manufacture or handiwork is carried on and which is operated for the primary purpose of (1) providing gainful employment or professional services to the handicapped as an interim step in the rehabilitation process for those who cannot be readily absorbed in the competitive labor market or during such time as employment opportunities for them in the competitive labor market do not exist; or (2) providing evaluation and work adjustment services for disdavantaged individuals under Part 402 of this chapter.

Subpart B-State Plans for Vocational Rehabilitation Services STATE PLAN CONTENT: ADMINISTRATION § 401.2 The State plan: general require

ments.

(a) Purpose. A basic condition to the certification of Federal funds to a State for vocational rehabilitation services is a State plan found to meet Federal requirements. This plan shall constitute a description of the State's vocational rehabilitation program. The State plan shall meet the requirements as to content hereinafter stated. It shall provide for financial participation by the State, and shall provide that it will be in effect in all political subdivisions of the State except as specifically provided in §§ 401.9 and 401.10. The Administrator shall approve any plan meeting the requirements of the act and of this part. Upon desig

nation of a new State agency (see 401.5), a new State plan must be submitted.

(b) Form. The general form and content of the State plans are set forth in the State Plan Guide which is distributed to all State agencies administering vocational rehabilitation programs.

(c) Amendment. The plan shall provide that it will be amended whenever necessary to reflect a material change in any applicable phase of State law, organization, policy, or agency operations and that such amendments will be submitted to the Social and Rehabilitation Service before it is put into effect, or within a reasonable time thereafter.

(d) Separate part relating to rehabilitation of the blind. If, as hereinafter provided for, a State agency for the blind administers or supervises the administration of that part of the State plan relating to the rehabilitation of the blind, such part of the State plan shall meet all requirements as to submission, amendment, and content prescribed by the act and this part, as though it were a separate State plan.

§ 401.3 Approval of State plans and

amendments.

Both the original plan and all amendments thereto shall be submitted to the Regional Commissioner.

(a) New or substantially revised plans. New or substantially revised plans are approved by the Administrator.

(b) Plan amendments. An amendment to a plan is approved by the Regional Commissioner. If an amendment is approved, the Regional Commissioner incorporates it into the approved State plan and advises the State. If the Regional Commissioner considers an amendment not to be approvable and is unable to secure necessary changes by the State, he submits the amendment to the central office of the Social and Rehabilitation Service for appropriate action.

§ 401.4

Withholding of funds.

(a) When withheld. When after reasonable notice and opportunity for hearing to the State agency it is found that (1) the plan has been so changed that it no longer complies with the requirements of section 5(a) of the act, or (2) in the administration of the plan there is a failure to comply substantially with any such provisions, further payments under section 2 or 3 may be withheld or limited as provided by section 5 (c) of the act. The State agency is notified of the action taken.

(b) Judicial review. The decision to withhold payments described in paragraph (a) of this section may be appealed to the U.S. district court for the district in which the capital of the State is located. The court will review the action on the record in accordance with the provisions of the Administrative Procedure Act.

(c) Informal discussions. Hearings described in paragraph (a) of this section are generally not called until after reasonable effort has been made by the